The plaintiffs, approximately 100 migrant farmworkers, instituted this action under the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq. (1982) ("FLSA"), against six farm owners in Orange County, New York ("defendants:).
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The plaintiffs seek to recover wage deductions made by the defendants for housing provided to the migrant workers in the defendants' labor camps, during 1978-1983 growing seasons. The plaintiffs claim that by deducting housing costs, the growers violated the minimum wage provisions of the FLSA. See 29 U.S.C. § 206.

In a prior decision, this Court stayed the proceedings before it, pending an administrative hearing and a final determination by the Administrator ("Administrator") of the United States Department of Labor ("Labor Department"). See 477 F. Supp. 102 (S.D.N.Y. 1979).
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In November 1983, the Administrator issued his final decision. The plaintiffs and defendants now seek judicial review of that decision under the Administrative Procedure Act, 5 U.S.C. § 706(2) (1982) ("APA"), and both move for summary judgment under Federal Rule of Civil Procedure ("Rule") 56(c).
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The government requests that both motions for summary judgment be denied, and that the Administrator's decision be affirmed in all respects.

The plaintiffs argue, inter alia, that no housing costs should be computed as part of their wages because the housing in question was furnished primarily for the benefit and convenience of the growers. The defendants argue that the deduction -- for housing costs were appropriate, and that -- even if the deductions were inappropriate -- under the doctrines of statutory and equitable estoppel, the growers should not be held liable for compensatory or liquidated damages.

After careful consideration of the extensive record in this case, the Court concludes that the housing in question was furnished primarily for the benefit and convenience of the growers, and, therefore, housing costs may not be included as part of the plaintiffs' wages.
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If housing were not provided, the growers would not be able to secure an adequate workforce to operate their farms. Although there are benefits on both sides of the ledger, the benefit to the growers clearly outweighs the benefit to the workers.

The Court rejects the defendants' arguments concerning estoppel, and rejects the government's request that the Administrator's decision be affirmed in all respects. For the reasons set forth below, summary judgment is granted in favor of the plaintiffs.

Background

The defendants in this action are engaged in the business of growing and harvesting crops such as onions, lettuce, and celery.
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They employ migrant workers on a seasonal basis and pay minimum wages on an hourly basis.
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The growers provide housing for most of the migrant workers while they are employed on the growers' farm.

The record shows that there are not enough workers available in the neighboring area to satisfy the growers' need for labor. In addition, the record shows that if housing were not provided it is unlikely the migrant workers would be able to obtain off-site housing. Both sides agree that the migrant workers could not afford to work for the growers if housing were not provided.
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The record also indicates that the housing
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in the migrant labor camps is generally of poor quality: many buildings are structurally unsound, and the premises are often unsanitary; numerous buildings have no indoor toilets, and some housing has no indoor plumbing at all. The facilities are often overcrowded and lack proper light and ventilation. Workers generally have no access to telephones, laundromats, shopping centers, or recreational areas.

The minimum wage provisions of the FLSA were extended to include agricultural workers in 1978. Prior to that time, on-site housing had always been provided by the defendants without charge. When the FLSA became applicable to farmworkers, however, the defendants began to charge the migrant workers for the housing provided. From 1978 to 1983, the growers charged between $8.00 and $12.50 a week for the housing. The defendants generally deducted $.25 per hour from the cash wages of each worker for whom lodging was provided.

The FLSA, and the Regulations adopted thereunder, requite that all covered employees
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be paid a minimum wage. See 29 U.S.C. § 206(a) (1982); 29 C.F.R. § 531 (1984).
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The FLSA and the pertinent Regulations provide that the wage paid to an employee may include the reasonable cost to the employer of furnishing an employee with board, lodging, or other facilities. See 29 U.S.C. § 203(m);
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29 C.F.R. §§ 531, 516. However, the Regulations also provide that "[t]he cost of furnishing 'facilities' found by the Administrator to be primarily for the benefit or convenience of the employer will not be recognized as reasonable and may not therefore be included in computing wages." 29 C.F.R. § 531.3(d)(1).

The crucial question in this case is whether, under the FLSA and its Regulations, the defendants may include the cost of housing as part of the plaintiffs' minimum wage or whether the defendants are prohibited from doing so under the convenience-of-the-employer doctrine. The Administrator concluded that the defendants were entitled to treat the cost of housing as part of the wage paid to the plaintiffs. Because the Administrator failed to consider all the relevant factors, however, the Administrator's decision must be set aside. Based on the record before the Administrator, the plaintiffs are entitled to judgment as a matter of law.

Summary judgment may be granted upon judicial review of an administrative decision when there is no genuine issue as to any material fact and the only dispute involves a question of law. See Doyle v. Behan, 670 F.2d 535, 539 (5th Cir. 1982); Davis Bros., Inc. v. Marshall, 522 F. Supp. 628, 632 (N.D. Ga. 1981). In the case at bar, sufficient uncontroverted facts have been established by the parties to permit determination of the legal questions presented.

B. The APA

The Administrator's decision in this case is subject to judicial review in accordance with the APA, 5 U.S.C. § 706, and, therefore, the decision cannot stand if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. § 706(2)(A). See Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 413-14, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971). The scope of judicial review is narrow, and the court should not substitute its judgment for that of the agency. Id. at 416; Connecticut v. E.P.A., 696 F.2d 147, 155 (2d Cir. 1982).

Under the arbitrary and capricious standard, however, the reviewing court should set aside an administrative decision if the agency "failed to consider an important aspect of the problem [or] offered an explanation for its decision that runs counter to the evidence before the agency." Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 103 S. Ct. 2856, 2867, 77 L. Ed. 2d 443 (1983). There must be "'a rational connection between the facts found and the choice made.'" Id. (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168, 9 L. Ed. 2d 207, 83 S. Ct. 239 (1962)). The reviewing court must "'consider whether the [administrative] decision was based on a consideration of the relevent factors and whether there has been a clear error of judgment.'" Id. (quoting Bowman Transp. Inc. v. Arkansas-Best Freight System, 419 U.S. 281, 285, 42 L. Ed. 2d 447, 95 S. Ct. 438 (1974)).

With this standard of review in mind, the Court concludes that the Administrator's decision -- holding that the defendants may include rent as part of the plaintiffs' wages under the FLSA -- must be set aside under the arbitrary and capricious standard and because the decision is not in accordance with the law.

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